Onome Amuge
Gold prices touched their highest level in more than a month on Thursday, lifted by safe-haven flows as traders weighed political risks to the US central bank’s independence against resilient economic data that otherwise pointed to continued strength in the American economy.
Spot gold rose 0.43 per cent to $3,413 per ounce, its strongest level since late July. The rally was underpinned by a weaker dollar and sliding Treasury yields, even as growth and labour market figures reinforced the Federal Reserve’s case for keeping interest rates steady.
Fresh data showed the US economy expanded at an annualised pace of 3.3 per cent in the second quarter, topping both forecasts and the government’s preliminary 3.0 per cent estimate. Initial jobless claims also fell to 229,000 in the week ending August 23, below expectations and pointing to continued labour market resilience despite earlier revisions showing a slower pace of job creation this year.
Ordinarily, such figures would weigh on bullion, which tends to struggle when yields rise and the dollar strengthens. But with Treasury yields drifting lower, investors turned instead to political risk and monetary policy speculation.
The dollar index, which measures the greenback against six peers, fell 0.37 per cent to 97.82, making gold cheaper for non-US buyers.
Concerns over the Federal Reserve’s institutional independence intensified after Bloomberg reported that governor Lisa Cook had filed a lawsuit against President Donald Trump for attempting to remove her from office. Trump has accused Cook of mortgage fraud, an allegation she denies, in what analysts say marks an unprecedented confrontation between the White House and the central bank.
Traders are also positioning ahead of the release of the Fed’s preferred inflation gauge, the core Personal Consumption Expenditures price index, due Friday. Consensus expectations point to a slight acceleration in July to 2.9 per cent year on year, from 2.8 per cent previously.
Markets are betting heavily that the central bank will pivot to easing next month. Data from the Prime Market Terminal show that traders now assign an 82 per cent probability to a 25 basis point rate cut at the Fed’s September meeting.
Technical analysts suggested the rally could extend further if bullion sustains momentum above $3,400. “Breaking that threshold opens the door to retesting July’s high of $3,438,” said one strategist, pointing to the Relative Strength Index, which signals growing buying pressure.
Gold has gained nearly 12 per cent year-to-date, supported by geopolitical shocks, persistent inflation uncertainty and strong demand from central banks. Analysts expect its safe-haven allure to remain intact so long as political challenges to Fed independence overshadow robust US economic data.
